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Tax efficiency in selected Indian states
This paper attempts to measure pure tax e�ciency of rfteen major Indian states (Andhra Pradesh, Assam, Bihar, Haryana, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamilnadu, Uttar Pradesh and West Bengal) for the period 1980�81 to 1992�93 in a manner that allo...
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| Format: | Printed Book |
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Empirical Economics (1999) 24:641�654
1999
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| Online Access: | http://10.26.1.76/ks/001820.pdf |
| Summary: | This paper attempts to measure pure tax e�ciency of rfteen major Indian states (Andhra Pradesh, Assam, Bihar, Haryana, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamilnadu, Uttar Pradesh and West Bengal) for the period 1980�81 to 1992�93 in a manner that allows this e�ciency to vary both across time as well as across states. It is discovered that there is a moral hazard problem in the design of central grants in that higher grants by the central government to the state governments reduce e�ciency of tax collection by these states. The less poor states are more effcient in tax collection. The rankings of states by tax effciency for the various years do not converge. An index of aggregate tax effciency is calculated and it appears that this index has been stagnating. It is argued that the weight placed on tax e"ort in the formula determining central grants to state governments should be increased to improve tax effciency of state governments. |
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